Correlation Between Invesco Technology and Inverse Nasdaq

Can any of the company-specific risk be diversified away by investing in both Invesco Technology and Inverse Nasdaq at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Invesco Technology and Inverse Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Invesco Technology Fund and Inverse Nasdaq 100 Strategy, you can compare the effects of market volatilities on Invesco Technology and Inverse Nasdaq and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Invesco Technology with a short position of Inverse Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Technology and Inverse Nasdaq.

Diversification Opportunities for Invesco Technology and Inverse Nasdaq

0.0

Correlation Coefficient

Invesco Technology  Inverse Nasdaq

Pay attention - limited upside

The 3 months correlation between Invesco and Inverse is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Technology Fund and Inverse Nasdaq 100 Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Nasdaq 100 and Invesco Technology is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Invesco Technology Fund are associated (or correlated) with Inverse Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Nasdaq 100 has no effect on the direction of Invesco Technology i.e., Invesco Technology and Inverse Nasdaq go up and down completely randomly.

Pair Corralation between Invesco Technology and Inverse Nasdaq

If you would invest (100.00) in Inverse Nasdaq 100 Strategy on October 8, 2024 and sell it today you would earn a total of  100.00  from holding Inverse Nasdaq 100 Strategy or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Invesco Technology Fund  vs.  Inverse Nasdaq 100 Strategy

Invesco Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Technology Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Invesco Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Inverse Nasdaq 100

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inverse Nasdaq 100 Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Inverse Nasdaq is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco Technology and Inverse Nasdaq

The main advantage of trading using opposite Invesco Technology and Inverse Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Technology position performs unexpectedly, Inverse Nasdaq can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Inverse Nasdaq will offset losses from the drop in Inverse Nasdaq's long position.

The idea behind Invesco Technology Fund and Inverse Nasdaq 100 Strategy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.